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Wall Street mixed as Apple sours, Euro stocks gain

Treasuries fell amid improving economic data, while the Standard & Poor's 500 Index was flat as the worst slump for Apple in four years pulled technology shares lower and overshadowed better-than-forecast earnings. The yen weakened for the first time in four days against the dollar.

Ten-year Treasury yields rose two basis points to 1.84 per cent at 1:49 p.m. in New York. The S&P 500 erased gains after earlier topping 1,500 for the first time since 2007. Apple shares sank 12 per cent after the slowest profit growth since 2003. Japan's currency declined 1.4 per cent to 89.87 per dollar, while the Dollar Index was little changed. Oil helped lead commodities higher.

Treasuries fell as US jobless claims unexpectedly dropped last week to a five-year low, while the Conference Board's index of leading indicators rose in December by the most in three months in a sign the world's largest economy is poised to keep growing. US securities remained lower even after a $US15 billion auction in inflation-indexed 10-year debt drew a negative 0.63 per cent yield.

"There's high demand for some protection -- it tells you people are willing to pay a lot for that protection," said William Larkin, a fixed-income money manager who helps oversee $US500 million at Cabot Money Management Inc. in Salem, Massachusetts. As for the indirect bidders, "if you are a foreign central bank and you've got lots of US dollars to invest, TIPS make more sense. At least you have some protection against inflation."

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TIPS Sales

The last six sales of 10-year Treasury Inflation Protected Securities since January 2012 have drawn negative yield as investors sought a refuge from inflation amid the Federal Reserve's efforts to prop up the economy. Indirect bidders, a group that includes foreign central banks, bought 53.3 per cent of the amount sold today, compared with 48.3 per cent in the prior auction and an average of 42.3 per cent for the past 10 auctions.

Netflix Inc. and Xerox Corp. helped lead the earlier rally in stocks after reporting better-than-estimated earnings, joining the three-quarters of S&P 500 companies to top projections so far in the reporting season.

Netflix, the world's largest online-video service, rose as much as 44 per cent for its biggest gain ever after beating its forecast for fourth-quarter subscriber growth and posting an unexpected profit. Xerox, the provider of document and business services, rose 3.4 per cent as earnings beat analyst projections thanks to a shift away from the traditional printing business.

Apple Watch

Apple, the world's biggest company by market value, slumped as much as 12 per cent in its biggest decline on a closing basis since 2008. It was poised for its lowest closing price in almost a year Apple's stock accounts for 15 per cent of the Nasdaq-100 and 3.6 per cent of the S&P 500.

Profit in the quarter to Dec. 29 was little changed at $US13.1 billion, the company said. Sales rose 18 per cent to $US54.5 billion, falling short of $US54.9 billion, the average analyst estimate compiled by Bloomberg.

The S&P 500 rose to a five-year high in regular trading yesterday after US lawmakers voted to temporarily suspend the federal debt limit. The benchmark gauge of American stocks has climbed 5.1 per cent this year. Earnings have beaten the average analyst estimate at about 75 per cent of the 134 companies in the S&P 500 that released results so far in this reporting season, data compiled by Bloomberg show.

Economic Data

Stock futures pared losses before the open of exchanges in New York after the government jobless-claims data. Applications for unemployment insurance payments decreased by 5,000 to 330,000 in the week ended Jan. 19, the fewest since the same week in 2008, the Labor Department said. Economists forecast 355,000 claims, according to the median estimate in a Bloomberg survey.

Two shares advanced for each that fell in the Stoxx Europe 600 Index, which added 0.2 per cent to an almost two-year high. EasyJet Plc climbed 5.1 per cent as Europe's second-largest discount carrier said fiscal first-quarter sales gained 9.2 per cent. Opap SA tumbled 11 per cent in Athens as the European Union's highest court said Greece's gambling monopoly is unlawful. Logitech International SA, the world's biggest maker of computer mice, fell 9.6 per cent in Zurich after posting a third-quarter loss of $US195 million.

Silver for immediate deliver fell 1.7 per cent, the first drop in nine days, and nickel slipped 0.9 per cent. Oil climbed 1 per cent to $US96.13 a barrel and the spread between West Texas Intermediate crude and London-traded Brent narrowed amid speculation the Seaway pipeline will soon resume full shipments.

The yen weakened at least 0.6 per cent against all 16 major peers as Japan's deputy economy minister backed further declines. A yen at 100 to the dollar wouldn't be a problem, Yasutoshi Nishimura said in an interview in Tokyo, even after the currency's 11 per cent drop in the past three months.

Yen Watch

Nishimura's "comments reinforce investor expectations that the Japanese government would like to see dollar-yen extend its recent correction," Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in a report today.

The rupee was little changed at 53.6850 per dollar after falling to as low as 53.8913. India increased the limit on foreign investment in local-currency bonds by $US10 billion to $US75 billion, the central bank said.